The coronavirus outbreak is threatening to slow the global solar-energy revolution as it cuts the supply of key equipment for solar and wind farms in China and beyond.
As cases of the disease mounted over the past week, manufacturers including Trina Solar Ltd. sounded the alarm over production delays while developers like Manila Electric Co. in the Philippines said projects would be held up.
“If the virus outbreak lasts beyond the first quarter and spreads to more geographies, as is currently happening in Korea and Italy, then it may very well slow down global renewable energy deployment,” pointed Ali Izadi-Najafabadi, head of analysis in Asia for Bloomberg NEF which has downgraded its outlook for installations this year.
While China is slowly starting to get back to work after an extended shutdown to contain the virus’ spread, many factories are still not at full capacity amid a lack of staff and raw materials.
Green manufacturers are not spared, with analysts and industry groups flagging the potential for higher costs and a hit to overseas operations, especially if the outbreak continues.
For now, the impact on green companies remains manageable and mainly confined to areas in China where the coronavirus was first found.
Solar giant LONGi Green Energy Technology Co. has said it sees no significant impact on its panel sales and production as it kept shipment targets for the year unchanged.
Even so, the warnings that have started to trickle out are a reminder of China’s importance in the global supply chains involved in building clean-energy plants and reducing the pollution that’s damaging the climate.
The country leads the world both in installing new wind and solar farms and in producing photovoltaic panels used almost everywhere. Of the top 10 cell makers, nine are mainly Chinese manufacturers and one is from South Korea.
Overseas plants could be hit as they will be unable to receive components from China given flight restrictions, according to the China Photovoltaic Industry Association.
The group has asked the government to delay tariff cuts for domestic projects - meant to encourage solar plants to compete on their own against conventional fuels like coal and natural gas - due at the end of March.
Wind power utilities in China have also requested for policy makers to extend feed-in tariffs for onshore installations beyond this year, according to the Global Wind Energy Council, citing conversations with companies. The current policy requires wind farms cleared for construction through 2020 to be completed by 2021 to qualify for subsidies.
BNEF lowered its forecasts for solar and wind installations in China this year, but cautioned that capacity can ramp up quickly after the outbreak and that disruptions won’t be enough to reverse an oversupply.
The analysts now expect a maximum of 43 gigawatts of solar installations this year from 45 gigawatts before. Its most pessimistic forecast is for 31 gigawatts compared with at least 37 gigawatts estimated previously. China added about 30 gigawatts last year, according to the industry association.
So far, it’s the solar industry that has suffered more, with wind turbine makers bouncing back. Facilities owned by Vestas Wind Systems A/S and Siemens Gamesa Renewable Energy SA in the city of Tianjin, in the northeast of the country, are close to major ports and as yet not subject to any World Health Organisation warnings on cargo transport from China.
“Vestas restarted production as planned on February 15 and received further approval on February 23, which has enabled us to significantly ramp-up our production in China,” a spokesperson for the Danish turbine maker said. “We expect to return to full capacity soon, provided local conditions allow. We are seeing more suppliers resuming operations.”